Effect of new minimum wage up for debate

(Publish2.com partner.)  Almost 100,000 Oregonians will see their pay increase 15 cents per hour on Jan. 1 as the state's minimum wage goes from $8.95 an hour to $9.10 per hour. But there is little agreement on what the impact of this increase will be.

Oregon's minimum wage is the second-highest in the country, after Washington, which will increase its minimum by 13 cents per hour, to $9.32, on Jan. 1.

State officials say the increase in Oregon's minimum wage will boost the state's economy.

The Oregon Restaurant and Lodging Association says it will hurt small businesses.

The Oregon Center for Public Policy says the increase, while welcome, isn't enough to help the state's lowest wage-earners.

And University of Oregon economist Tim Duy, who is director of the Oregon Economic Forum, takes something of a middle ground. He said he doesn't see it as having much of an impact.

"It's a pretty small number," Duy said, "It's not going to have a large negative or positive impact, quite frankly."

The state Bureau of Labor and Industries says the increase, which is tied to inflation, will put more money in 98,000 Oregonians' pockets next year and generate more than $20 million in new economic activity for the state.

Minimum-wage employees working 30 hours a week will have $234 more to spend in 2014, state officials said.

Of these workers, most -- about 80 percent -- are at least 20 years old, the state said, based on statistics from the Economic Policy Institute, a nonpartisan think tank. And, if Oregon follows national patterns, about two-thirds of the lowest paid workers are women, state officials said.

The restaurant and lodging association, on the other hand, has argued that increasing the minimum wage hurts small businesses such as restaurants, which are already facing other increased costs, including health care.

The association argues that "raising minimum wage is not an effective means of solving the low standard of living. When minimum wage rises, so does the cost of day care, groceries and other amenities to compensate for the increased cost of labor. Therefore, instead of fixing the problem, raising minimum wage merely extends the problem."

The Oregon Public Policy Center says the 15-cent increase in the minimum wage "still leaves too many working families unable to meet basic needs. An even higher wage floor would be good for workers and our state."

The center estimated "it would take at least a minimum wage of about $9.55 to lift a family of three with one parent working full-time out of poverty in 2014."

Duy said that while certain industries that employ minimum wage workers "will feel the sting of that higher wage," it's not like the increases of 50 cents per hour or more the state experienced in the 1990s.

"It's easy to lose your focus when you talk about minimum wage," he said.

When the minimum wage goes up, there's always a concern about how it will affect employers and the economy, Duy said.

But he added, in addition to the January increase being relatively small, he expects employers to pass at least some of the higher cost on to their customers rather than absorbing it all themselves.

"Their customers may have to pay a little more for a beer," Duy said.

The increase also comes at a time when the restaurant and hotel industry, which employs a lot of minimum-wage workers, is showing strength, he said.

"Food and hospitality employment has been growing quite strongly," Duy said. "It has more jobs now than pre-recession. So ... this should mitigate some of the impact.

"Oregon and Washington are very similar. We always have a higher minimum wage compared to the rest of the country," he said. "But there is not evidence that it's having an impact on a dramatically slower growth rate."